Orange drops plan to acquire Bouygues Telecom

Bouygues Telecom

Orange has dropped its ambition to acquire smaller rival French service provider Bouygues Telecom following a failure to strike an acceptable deal. 

“Orange has examined the possibilities of participating in an operation that would lead to consolidation in the French telecoms market, and believes that it cannot pursue this avenue at the present time as the conditions that the Group has set have not been met,” the company said in a brief statement.

Orange deputy CEO Pierre Louette revealed last month discussions between the pair had reached an impasse, without giving details.

Bouygues Telecom has been in difficulty since proprietor Martin Bouygues failed to secure a deal with Vivendi that would have led to the acquisition of the latter’s telecom unit SFR. Vivendi instead opted to go with Patrick Drahi’s investment vehicle Altice and its cable operator subsidiary Numericable. Bouygues has attempted – and failed – to secure a deal with either Iliad Telecom/Free or Orange, and has announced a sharp reduction in its headcount.

Analysts at Société Générale have argued that an acquisition of Bouygues Telecom by Orange lacks industrial logic and would likely fall foul of regulators, suggesting instead that a combination of the latter with Free would make more sense.
According to the analysts, any deal with Orange would likely require Bouygues to sell off its mobile network, as the combined entity would have a portfolio of frequencies that dwarfed that of its nearest rival, SFR.